Metatrader Indicar Force Index
Force Index is also termed to be one of the important Metatrader indicators. The Force Index Technical indicators was formed and developed by the famous economist Alexander Elder. The index of the technical indicator is used to measure the Bulls Power in each point of increase and decrease level. The technical indicator is enhanced to connect the basic element of the market information such as the price trend, the fluctuation in the price level and the volume of transactions.
The price index is used in the approximation of the better enhancement of the Moving Average. The proximity with the short moving average helps in the authorization of the two intervals that are proposed to contribute the findings of the best opportunity. The price index thus determined helps in the opening and closing positions. The approximations of the price index is enhanced in the movement of the long moving average of 13-period and the indexes are formulated in showing the price trends and their changes. The propositions in the price trends are explained as below:
· The technical indicators are better to be purchased when the fluctuating forces fall below the line of zero and when it becomes zero. The indicators are best to be bought when the period of the indicators show an increasing trend.
· The force of the index show a signalized continuation with an increasing tendency and it shows an increased rise in the new peak level.
· The signal of the price indicators are good to be sold when the index level becomes positive during the decreasing trend.
· The force of the index is said to be in a new trough when the index shows the signal of the Bears Power. The Bears Power continues in the decreasing trend and enhances the index to fall in the new trough.
· When the price level do not show any change or correlate with the corresponding price change in the volume level, it is best to indicate the force level. This enhances the technical indicator to stay on a certain level and makes the trend to change to immediate response level.
Estimation
The force for every market situation and market movement are characterized by certain level of changes such as direction, scale and volume. When the closing price of the current market bar is said to be higher than the preceding bar, then the force of the market becomes positive. When the current closing price of the market bar is expected to be lower than the preceding one, then the market force is said to be in a negative situation. The greater the difference in the market value, the great is said to be force of the price level. The larger the transaction volume, the greater is said to be the expected force. Finally the derivation is arrived as follows:
Force Index (i) = Volume (i) * ((MA (ApPrice, N, i) MA (ApPrice, N, i-1)
The abbreviations are derived as follows:
Force Index – The force index is defined as the status of the current bar
Volume (i) – The present volume of the current bar is determined.
MA (ApPrice, N, i) – Moving average of the current bar for the N period and the Simple, Exponential, Smoothed and Weighted form.
ApPrice – Applied price
N – The number of period applied in the specification of price
MA (ApPrice, N, i-1) – Moving average of the expected previous bar.
This entry was posted on Thursday, July 31st, 2008 at 8:33 am and is filed under metatrader indicator. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
